Changes are Coming to the Biden Administration's Federal Sustainability Plan

President Joe Biden issued an Executive Order on Catalyzing Clean Energy Industries and Jobs through Federal Sustainability on Dec. 8, 2021, emphasizing the federal government's role and initiative "[a]s the single largest land owner, energy consumer, and employer in the Nation," to "build, buy, and manage electricity, vehicles, buildings, and other operations to be clean and sustainable."

The Executive Order (E.O.) and its accompanying Federal Sustainability Plan follow and build upon two earlier climate-related E.O.s, Executive Order on Tackling the Climate Crisis at Home and Abroad (E.O. 14008, Jan. 27, 2021) and Executive Order on Climate-Related Financial Risk (E.O. 14030, May 20, 2021), as well as an advance notice of proposed rulemaking issued by the Federal Acquisition Regulatory (FAR) Council in October 2021 (comment period extended from Dec. 14, 2021, to Jan. 13, 2022), which seeks feedback on a potential amendment to the FAR to ensure that federal agency procurements minimize the risk of climate change.

This E.O. further invigorates the Biden Administration's efforts to position the U.S. as a leader on the low-carbon economic transition to bring net greenhouse gas emissions to zero, empowering nearly every federal agency with a role in reducing emissions. Further, the directive is the latest in a series of actions intended to reverse actions taken by the Trump Administration's broader deregulatory initiatives to "unravel the red tape."

Federal Sustainability Plan Goals

The Biden Administration's sustainable procurement initiatives have the potential to impact a broad array of industries, contractors and lessors. At a high-level, the Federal Sustainability Plan seeks to achieve the following:

• Net-zero emissions procurement: Building on E.O. 14030, the Federal Sustainability Plan seeks to require public disclosure of greenhouse gas emissions by major federal contractors and accompanying reduction targets. Relatedly, the FAR Council has proposed an amendment to the FAR "to ensure that major Federal agency procurements minimize the risk of climate change, including requiring the social cost of greenhouse gas emissions to be considered in procurement decisions and, where appropriate and feasible, giving preference to bids and proposals from suppliers with a lower social cost of greenhouse gas emissions."
• Net-zero federal buildings and leases: In a Memorandum to Executive Agencies (M-22-06) (issued as part of the Sustainability Plan), the General Services Administration (GSA) is directed to develop guidelines for "Federal green leases" within 180 days of the issuance of the E.O. to ensure that all new leases (including replacing, succeeding and superseding leases) entered into after Sept. 30, 2023, "for at least 25,000 rentable square feet in a building where the Federal Government leases at least 75 percent of the total building square footage" are "green" leases. The memorandum provides that such "green leases" will require the lessors to report to the agency "annual data on facility greenhouse gas emissions, energy consumption, water consumption and waste generation." New leases entered into after Sept. 30, 2030, for greater than 25,000 rentable square feet must be in net-zero emissions buildings.
• "Buy Clean" policy: The E.O. establishes a "Buy Clean" policy, promoting the use of construction materials with lower embodied emissions and pollutants. A "Buy Clean Task Force" is set to provide recommendations on policies and procedures within 180 days. Their task includes identifying and prioritizing the pollutants and materials, "such as concrete and steel," to be covered by the Buy Clean policy, "mechanisms for collecting environmental performance information for primary processing facilities of eligible materials, as well as recommendations for pilot programs to incentivize procurement of lower-embodied-emission materials."
• Carbon pollution-free electricity: The E.O. directs the U.S. Secretary of Defense, the Secretary of Energy and the GSA Administrator to "use the scale of the Federal Government's electricity use to aggregate and accelerate new carbon pollution-free electricity generation capacity to meet Federal energy needs." Under the Sustainability Plan, the government will work with utility service providers to negotiate supply contracts that include carbon pollution-free electricity and energy storage. Agencies are also directed to explore options to increase energy and water efficiency, including the use of Utility Energy Service Contracts (UESCs) and Energy Savings Performance Contracts (ESPCs).
• Net-zero emission vehicles: The E.O. calls for 100 percent zero-emission vehicle acquisitions by 2035. Beginning June 30, 2022, and annually thereafter, agencies are required to submit a "strategic plan for transformation of its fleet to zero-emission vehicles," which must include, among other things, "a plan for installation of necessary charging or refueling infrastructure; … and consideration of energy storage technologies and ancillary services to support vehicle-to-grid technology."

Conclusions and Takeaways

The latest E.O. and the Sustainability Plan establish concrete goals, policies and procedures to advance the Biden Administration's sustainable procurement goals. What makes this E.O. unique, as compared to previous Biden and Obama Administration federal sustainability orders, is that it is much broader in its objectives and the parties of impact.

As such, it will be critical for companies to review and evaluate how the E.O. relates to their current and future federal business and objectives, as well as prepare for the opportunities it will create. Federal contractors and lessors can (and should) expect to see these policy principles embodied in coming procurement actions – and perhaps start taking steps towards understanding their current greenhouse gas emissions, as well as ways to reduce remissions.

While climate change remains a polarizing issue, and while we are still grappling with executive overreach in federal procurement (see, e.g., the federal contractor vaccine mandate), these initiatives will likely be met with less resistance and implemented in a meaningful way, creating immediate and lasting impacts to the federal procurement landscape.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.